Draft version
Global Internal Audit Services
Conducted in Accordance with the International Standards for the Professional Practice of Internal Auditing.
Organizational unit:
Unit XY
Report No.:
Audit Title: Purchasing Audit
1
Management Summary
2
Implementation Report
Appendix
3
Organizational Chart
Confidential
15/2007
Draft version
Global Internal Audit Services
Management Summary
Conducted in Accordance with the International Standards for the Professional Practice of Internal Auditing
Audit Title:
Audit Type:
Audit Report No.: 15/2007
Standard
Audit Status:
Auditor(s): John Miller, Jane Myers,
Bill Smith
Basic Audit
Executive Responsible: Catherine Dubois
Date of Audit: 12 - 23 February 2007
Date of Closing Meeting: 23 Febr. 2007
Participants of Closing Meeting: Tim Cohen, Catherine Dubois, Sonia Jiang, John Miller, Jane Myers, Maria Rojas, Bill Smith
Distribution List: Tim Cohen, Catherine Dubois, Sonia Jiang, Maria Rojas,
Note: Due to confidentiality requirements the distribution of Audit Reports must be limited. Therefore, please forward this report only to the additional parties which should be informed
and / or might be part of the implementation of the audit recommendations.
Overview/Audit Objectives: Global Internal Audit Services has conducted an audit of the purchasing function. The audit included Purchasing's organizational structure,
policies and guidelines, as well as the relevant operational and financial processes.
Audit Status
Date
Audit Rating
(please tick)
Basic Audit
12 - 23
February
2007
Ref. Impl
Report
Overall Audit Statement/
Scoring
Findings / Recommendations
Needs Improvement
1. Signature policy:
Finding/observation: The signature policy has not been adapted to the current organizational structure and is
thus not up-to-date.
Recommendation: The signature policy is to be adapted to the current organizational structure as laid out in
the organizational chart.
Y
2. Vendor selection and competitive bidding process:
Finding/observation: The practice of soliciting at least two bids from external vendors prior to award of
contract has not been implemented in all Purchasing areas and has not been included in the purchasing
guidelines as a requirement.
Recommendation: A rule is to be included in the purchasing guidelines requiring the solicitation of at least two
offers from external vendors. This rule is to be implemented in all Purchasing areas.
Meets Standard
Status Check I
R
Y
G
R
Y
G
R
Y
G
Follow-up Audit I
Meets Standard
Status Check II
# of findings: 3
Meets Standard
New: 3
In process:
Reasonably controlled:
GIAS Pending:
Done:
Confidential
Open:
Mgmt. disagreed:
1
3
Draft version
Global Internal Audit Services
Conducted in Accordance with the International Standards for the Professional Practice of Internal Auditing.
Audit Implementation Report No.: 15/2007
Organizational unit: Purchasing
Auditor(s): John Miller, Jane Myers,
Bill Smith
Basic Audit
Audit Status:
Monitoring
Audit Items
No.
1
Classification
B
Observation/Finding
Strategy and organizational structure
Signature policy
Risk condition: The signature policy has not been
adapted to the current organizational structure and is
thus not up-to-date.
Risk
Category
Recommendation
Action/ Management
Responses
Responsible
Completion
date
Status
Local
Management
Status
GIAS
Business The signature policy is to be adapted Recommendation Catherine
risk
to the current organizational structure will be implemented Dubois
as laid out in the organizational chart.
03/2007 O
New
Financial All supplier invoices are to be entered Recommendation Catherine
risk
into the system by the financial
will be implemented Dubois
accounting department.
03/2007 O
New
Risk consequence: There is a risk that unauthorized
persons might sign documents to the disadvantage of
the company.
2
L
Accounting
Finance and administration responsibilities
All accounting entries, including supplier invoices, are to
be carried out by the financial accounting department.
GIAS found out that all supplier invoices related to the
car pool are being entered into the accounting system
not by the financial accounting department but by the
respective area within Purchasing.
Risk condition: Segregation of duties and the dual
control principle are not guaranteed.
Risk consequence: Risk of incorrect accounting entries.
Confidential
Draft version
Global Internal Audit Services
Conducted in Accordance with the International Standards for the Professional Practice of Internal Auditing.
Audit Implementation Report No.: 15/2007
Organizational unit: Purchasing
Auditor(s): John Miller, Jane Myers,
Bill Smith
Basic Audit
Audit Status:
Monitoring
Audit Items
No.
Classification
3
B
Observation/Finding
Purchasing process
Vendor selection and competitive bidding process
Risk condition:
(1) Good business practice requires that at least two
offers from external vendors be available prior to award
of contract. This requirement has not been included in
the purchasing guidelines.
(2) The practice of soliciting at least two bids from
external vendors prior to award of contract has not been
implemented in all Purchasing areas.
Risk
Category
Business
and
financial
risk
Recommendation
Action/ Management
Responses
Responsible
A rule is to be added to the
Recommendation Catherine
purchasing guidelines requiring the
will be implemented Dubois
solicitation of at least two offers from
extenal vendors. This rule is to be
implemented in all Purchasing areas.
Risk consequence: There is a risk that the supplier
selection process is not guided by efficiency and
effectiveness considerations. This may lead to financial
and/or quality loss.
Confidential
Completion
date
Status
Local
Management
03/2007 O
Status
GIAS
New
Organizational Chart
Purchasing
Global Purchasing Manager
Catherine Dubois
Purchasing –
External Services
Purchasing –
Marketing
Purchasing –
IT
Purchasing –
Office Equipment
Purchasing –
Car Pool
C. Vargas
Y. Zhou
S. Dawson
P. Stern
K. Hamilton